Tuesday, 16 October 2012

Supermarkets - Friend or Foe?

How much of your money do you spend at the supermarket?

If you check your bank statement for the month, you may be shocked to find how often and how much you spend at your local supermarket. I certainly was. £20 here, £30 there, and it adds up very, very quickly. I'm told that out of every £8 spent on the British High Street, £1 of it is spent in Tesco's.

It's no surprise though. Supermarkets are absolute masters at marketing and selling you stuff. They have been doing this for years, and you probably know a couple of their tricks already:

Milk, for example. This has been a loss leader for supermarkets for years, (hence the complaining dairy farmers!). Practically everyone drinks milk, so you're going to buy it anyway, but people are such disorganised creatures that this can be used to a shop's advantage. I'm the same as you, I often just "nip in" to a store simply for milk, but because the milk is always situated quite far from the door, I have to walk past all sorts of other products to get there, and very often something else catches my eye.

It might be something I actually need, or just something I quite fancy at that moment, but it's soooo easy to fall into the trap that by the time I've made it past the checkout, there's 1 or 2 other items in my shopping bag. Kerching! More money in the supermarket's pocket instead of mine...

So the first rule of supermarket shopping to a budget is this: Never buy more than you went in for.

Be disciplined. I often make up a shopping list at home before going out. If I want to buy non-essentials like beer or chocolate, I'll put that on the list as well, but I'll decide how many or how much I can afford before going and stick to it.

Supermarkets also try and trick you with pricing.

Take a look at the price per 100ml for an 8 pack here, and
compare it with the single can price at the top of the post

At times, we're all a bit lazy and take some things for granted - like multi-packs are cheaper than the equivalent number of single units right? Well.. Cheeky supermarkets have started a worrying trend. I noticed recently, that buying a 4 pack of oceanspray cranberry juice would have cost me more than 4 solitary ones. Handily, they often put the price per litre in small print underneath the main price tag on the shelf (see the coke photos).

Another ruse also involves the shelf price tags. Often I have noticed that similar items from different brands will have comparable prices in different units. For example, one item may have price per kilo on, and the other price per pound which is a bit devious really.

A really easy and simple way to convert kilos to pounds.

There are 2.2 pounds in a kilo. So take the kilo number and multiply it by 2. Remember the number and move the decimal point back one, then add the 2 figures together.

If you can't remember this, you can always use the calculator in your mobile phone. So rule no.2 is: Always compare like with like.

Talking of mobiles, smart phones can come in quite handy at the supermarket. There are some very smart shopping apps out for most major smartphones now. You simply scan a product's barcode with your phone's camera and it brings up the prices at other retailers. Most of them also work for other goods and retailers, such as TV's and white goods.

However, marketing techniques can also be used to work for you as well.

Take loyalty cars for instance. Supermarkets use these to monitor what you buy and then tailor special deals to you personally. For example: I have several cats and as a result buy lots of cat food. I generally buy it in bulk from somewhere much cheaper, but occasionally have to purchase it from the supermarket when I run out. As a result, I sometimes get vouchers for money off cat food sent to me.

One thing to remember about loyalty cards though. They usually have a "threshold" for awarding points. E.g. Tesco's clubcard points are awarded for each pound you spend, so if you spend 99p, you won't get a single point, whereas spending a £1 you will. I don't want to encourage you to buy more expensive stuff just for the sake of points though. Wait until you are buying more items to get the full benefit.

I would also point out that these points are also worth more at different times of the year. Tesco's often run their double points scheme on the way up to Christmas. If you've already got a few points stashed away, this can really help, particularly at this time of year.

So rule 3: Make full use of your loyalty card, there's deals to be had.

Supermarkets also monitor their stock closely as well and price things accordingly.

Here's how it works: Recently Tesco's brought out there own brand IPA beer, priced at £1 a bottle. Great I thought, I'm having some of that. Everybody else thought that too, and over the next few days I noticed they'd often sold out. Fast forward 2 weeks and the price had jumped to £1.33. Still cheap. Fast forward another 2 weeks, and it's £1.50 a bottle - same as the rest of the beers, only nobody's buying it now and there's often some left on the shelf when I look, so it's obviously not selling in the same numbers as it was. Some time later, the price drops back down to £1.33.

I've noticed this with some of their other products as well, so something I buy regularly, if it goes up in price, I won't buy it for a couple of weeks and often the price comes back down again.

Rule 4: Be aware of pricing techniques and make it work for you.

Special Offers: Some are genuine and some are blatant marketing ploys to sell you stuff. There are rules governing this kind of stuff, but they're pretty lax. A supermarket only has to sell an item at any given price, at ONE store before reducing that price and then claiming a price drop in every other store it owns.

Have a look at this picture, featuring Tolly English Ale. There's 2 things to note here.

1stly, it states the price was £1.39 and has now dropped to £1. I buy this stuff regularly and as far as I'm aware, in this store, it's never been offered at anything other than £1.

Secondly, for beer, the price is pretty low, and that's because there are different tax rates on beers depending on their alcoholic content, (this is in the UK, I don't know about anywhere else, but it probably still holds true to some extent, wherever you are). Beers under 3% ABV (alcohol by volume), SHOULD be cheaper than those with a higher alcoholic content. Worth thinking about if you drink beer for it's taste rather than effect ;)

You can also see a similar ploy with bottles of wine. Every supermarket I've been in for the last 6 months has loads of half price/£4.99 offers on various bottles. So far as I can work out, many of these bottles have always been £4.99, and it does seem strange that you can barely find any wine for under a fiver anyway, as it's so much cheaper for the same stuff on the continent.

Rule no.5: Is it really a special offer, or are they trying to blag you?

Having said all this you'd be forgiven for thinking supermarkets are just trying to rip us off all the time, but this isn't quite true. They are trying to make as much money as possible, there's no denying that, but they still offer some exceptional deals to try and get people through their doors regularly.

Take their own brand and value ranges. These are always significantly cheaper than the branded versions of the same thing, and I'm pretty sure a lot of the time, they are actually exactly the same thing in different packaging. It's an issue some brands have actually commented on.

Kelloggs swear blind that their cornflakes never turn up anywhere else, but frankly, given the number of own brand products, it's highly unlikely that any given supermarket, even the biggest, could afford to have it's own factory of breakfast cereals, another factory for yorkshire puddings, another factory for... well you get the gist. In Kelloggs' case it may be true what they claim, but I can't see how it could be for the vast majority of products.

A simple taste comparison reveals a lot too. Take the quiche in the picture. This is a relatively new product and before they brought it out, there was the standard quiche and the posh quiche, the standard one at just under £2. It's still that price, but there's also the value one as well now at 82p. I honestly cannot tell the difference between this one and the standard one. Before or after cooking. As far as I am concerned they are EXACTLY the same. So why pay more for the box?

Rule 6: Try the value range, it's often exactly the same stuff you were already paying more for.

All in all, if you keep your wits about you, supermarkets can offer amazing value, but on the downside, they are so easy to spend all your money in. Mind you, if you do, at least you're not going to go hungry!